Ramirent may sell its temporary space rental operations in Sweden, Norway, Finland and Denmark. The company has announced a strategic review of the division, which it said had limited synergies with its core business.

At the same time, Ramirent said it will restructure its Danish business because of unsatisfactory profits. These actions will entail a €2 million one-off charge in the final quarter of 2017.

Ramirent stock image

The review of the temporary space operation is a significant move by the company to refocus on its core equipment rental activities. The temporary space business recorded revenues of €30 million in 2016 and services customers such as schools, health centres and office spaces.

Tapio Kolunsarka, President and CEO of Ramirent, said the updated group strategy – to be detailed at tomorrow’s Capital Markets Day in Helsinki - would see it focus on its core general equipment rental businesses “with disciplined development of rental or related businesses that are clearly synergistic to our core business.

“This is why we have initiated a process to assess strategic options, including a potential sale of our Temporary Space business which has limited customer and operational synergies with our core”, said Mr Kolunsarka. The review is expected to be completed in the first quarter of 2018.

The changes at the Danish operation will see a restructuring of the branch network in the country. Ramirent’s Denmark business had revenues of around €42 million last year, representing around 6% of the total group business.

On the wider strategy update, Mr Kolunsarka said Ramirent’s operating geography represented a €4 billion market that was growing and with market share gains and rental penetration increases possible “when we sharpen our value propositions and improve our operational execution.”

He said; “We see growth opportunities particularly within small and medium-sized businesses, and in Baltics and Europe Central, where we aim to focus even more in the coming years. We also see great opportunities for improving operational performance in our supply chain and aim to raise the service levels of our industry to a new benchmark by developing the rental industry’s best performing supply chain.

“The value proposition for renting instead of owning can be further strengthened by digitalization and making a step-change improvement in service-levels.”

Ramirent issued the following updated financial targets:

IndicatorTargetPrevious indicator & target

EPS growth (CAGR)

double digit % 2018-2020

net sales growth > GDP +2%-points p.a.

ROCE

16% by the end of 2020

ROE 12% per fiscal year

Dividend payout ratio

> 50% of net profit

> 40% of net profit

Net debt to EBITDA

< 2.5x at end of each fiscal year

< 2.5x at end of each fiscal year

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